Next Obamacare crisis: Small-business costs?

Think the canceled health policies hurt the Obamacare cause? There’s another political time bomb lurking that could explode not too long before next year’s elections: rate hikes for small businesses.

Like the canceled individual health plans, it’s another example of a trade-off that health care experts have long known about, as the new rules for health insurance prices create winners and losers. But most Americans won’t become aware of it until some small-business employees learn that their premiums are going up because of a law called — oops — the Affordable Care Act.

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Some will learn the opposite, that their premiums are going down because of the law. But as we saw with the canceled individual health plans, it’s the losers who will get most of the attention.

And the timing will be terrible for Democrats: A lot of those small businesses will have to start dealing with their new premiums in October — just in time for Republicans to make it an issue in their midterm election campaigns.

There are no widely accepted estimates for how many people could be affected, but even if it’s a relative minority, it won’t matter politically — because Democrats will once again have to defend the administration’s claims that the majority of Americans who have employer-based insurance won’t be affected by Obamacare.

“The biggest shocker for the small-business community is going to hit in October, which is interesting because it will be prime time for the election,” said Jessica Waltman, a top lobbyist at the National Association of Health Underwriters.

Here’s why: Next year, small-business health plans — those that cover 50 or fewer workers — will have to comply with a wide range of new rules, particularly the ones that say the businesses can’t be charged more if their workers have health problems. Their premiums will vary based only on the workers’ ages, whether they have individual or family coverage, what part of the country they live in, and whether they use tobacco — and older workers won’t be able to be charged more than three times as much as younger ones.

Those changes will be helpful to small businesses with older workers and employees with health problems, but they also mean that small firms with younger, healthier workers will have to pay more than they used to. The new small-business plans will also have to cover the same set of minimum benefits that individual health plans will have to provide, including pediatric care and mental health and substance abuse services.

“If you can’t use health [to set premiums] anymore, some people will move down and other people will move up,” said Gary Claxton, director of the Health Care Marketplace Project at the Kaiser Family Foundation. “If you’re a group of three 21-year-old men, you’ll pay more, because a group of three 64-year-olds somewhere else will be paying less.”

A lot of small businesses pushed off those changes this year by renewing their old, pre-Obamacare health plans early, extending them into next year. A common tactic, according to insurers and brokers, was to reset their plans with a Dec. 1 renewal date, which allowed them to hold onto the old benefits and rules as long as possible.

Next year, though, many of those small businesses will have to upgrade to health plans that comply with the new Obamacare rules. Unlike the canceled health insurance policies that largely hit this fall, those changes will be spread throughout the year.

But there will be a cluster of December renewals, industry officials say, and those small businesses will get the first look at their new premiums in October — right at the height of an election that’s increasingly being framed as a referendum on the impact of Obamacare.

“You’re going to have Joe the Plumber times a thousand around the country saying, ‘I got screwed,’” said a health insurance industry official who asked not to be identified in order to speak candidly.

That could be a big political problem for the Obama administration, which has taken pains to present the law as a badly needed source of relief for small businesses. It sets up health insurance marketplaces for small businesses, called SHOP exchanges, around the country to provide them with more choices and better bargaining clout, and it provides tax credits for the smallest firms.

The issue is too far down the road to get a lot of attention from the administration now, since it has plenty of more immediate concerns, especially with the start of Obamacare coverage Jan. 1 and the need to make sure no one has a gap in coverage.

But an administration official said the Obama team will be watching the small-business situation closely as the time for those renewals approaches. “I think that’s something we’re going to take a hard look at and see if there are things that can be tweaked” if there is a lot of disruption, the official said.